USD/CAD: a lift in oil prices coming?

Analysts at Nomura noted that that the Candian dollar is on the backfoot and how sentiment was turned decidedly negative recently.

Key Quotes:

“Concerns about the outlook for the US/Canada trade relationship, a pull-back in oil prices, nervousness about the Canadian housing market, and a run of weaker economic data have combined in a short space of time.

This negative sentiment looks set to linger, with participants clearly rattled, and this should keep CAD on the back-foot for a while longer. But over time, we expect the CAD to rebound.

Recent comments from OPEC officials point to production cuts being extended at least until end-2017. And with the global growth outlook still positive, we think demand/supply dynamics favor a lift in oil prices.

Moreover, while there is a risk that recent housing market concerns intensify, we prefer to hold a more sanguine assessment and do not foresee contagion across the sector.

The current issues plaguing an “alternative lender” appear to relate to liquidity rather than solvency and policy measures have been announced to help deal with imbalances and frothiness in selected markets.

As the dust settles, the CAD’s underlying fundamental drivers such as oil prices and the outlook for BoC policy, where we continue to see the start of the tightening cycle in H1 2018, should re-assert themselves.”

The website of www.cscapitalmarkets.com is operated by Cs Premium Consulting, Inc. (registration number 164,336 (IBC 2014).

Cs Capital Markets is a member of the CS Premium Consulting, Inc group; xStation and Capital Markets Stock trader is the trading name of XTB Limited which is authorised and regulated by the UK Financial Conduct Authority (FRN522157) with it's registered and trading office at Level 34, One Canada Square, Canary Wharf, E14 5AA, London, United Kingdom (company number 07227848). Cs Premium Consulting, Inc operates the website www.cscapitalmarkets.com.

The information on this website may only be copied with the express written permission of CS Capital Markets.

General Risk Warning: CFDs are leveraged products. Trading in CFDs carries a high level of risk thus may not be appropriate for all investors. The investment value can both increase and decrease and the investors may lose all their invested capital. Under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by, resulting from, or relating to any transactions related to CFDs.